Shares Terminology Flashcards
What is an affirmative covenant?
Affirmative (positive) covenants are covenants which require a party to do something, such as pay off servicing the debt. In bond agreements, affirmative covenants are used to protect the interests of both issuer and bond holder.
What is a negative covenant ?
A bond covenant restricting certain activities, unless agreed by the bond holder, are written directly into the agreement creating the bond issue, are legally binding on the issuer and exist to protect the best interest of the bond holders.
What is conversion premium ?
The amount by which the price of a convertible security exceeds the current market value of the common stock into which it may be converted. Convertibles are securities that can be exchanged at the will of the investor or the issuing company can force the conversion for a specified number of another form at an agreed upon price.
What is collateral ?
Something pledged as security for repayment of a loan. If the borrower fails to make payment, the lender can take the collateral to recoup losses. Because of this, loans with collateral typically have a lower rate of interest.
What is a term loan ?
A monetary loan that is repaid in regular payments over a set period of time, usually involves an unfixed interest rate that will add additional balance to be repaid.
Look up the meanings of these words.
Par value
Trustee
Debenture
Zero coupon bond
Floating rate note
